Laccase of Cryptococcus neoformans is encoded by the gene CNLAC1 and causes certain aminophenols and diphenols to be converted to melanin. Laccase activity was shown to increase virulence of this fungus for mice. Nearly isogenic strains were obtained which differed only at the CNLAC1 locus. Two melanin negative strains were studied, one which had been mutagenized and had a base substitution at condon 164 which changed histidine to tyrosine in a putative copper binding site. Site directed mutagenesis showed that this base substitution led to loss of laccase activity even though normal amounts of message were synthesized. Another melanin negative mutant had a 4 kb deletion beginning upstream to base 68 of the ORF, created by gene replacement. These melanin negative strains were compared to nearly isogenic strains which contained functioning copies of CNLAC1 supplied by transformation and nonhomologous integration. The melanin negative mutants were significantly less virulent for mice than the melanin positive strains. The greater virulence of melanin positive strains could not be explained by melanin protecting against oxidative attack. Melanin producing strains grown on L-DOPA medium were not protected from killing by hydrogen peroxide, oxides of nitrogen or human neutrophils. Cryptococci obtained from cerebrospinal fluid of infected rabbits were shown to produce CNLAC1 transcript on reverse transcriptase-polymerase chain reaction. Considering that L-DOPA is present in the central nervouse system, it seems likely that the effect of CNLAC1 on virulence is related to melanin formation, but the mechanism by which melanin affects virulence is unknown. Cryptococcal laccase has been expressed in Saccharomyces cerevisiae and Pichia pastoris so that antibody may be raised to this antigen and used for intracellular localization studies. Amounts of secreted laccase remain low, indicating a need for an improved expression system.